2026 has seen lots of action in the stock market. One small but significant change was legendary investor Warren Buffett stepping down from day-to-day control at Berkshire Hathaway after decades in charge.
But that does not mean that Buffett’s hard-earned investing wisdom is not still relevant.
In fact, the way 2026 has been shaping up in the stock market, I reckon some of Warren Buffett’s thinking may be more relevant than ever!
This looks like a greedy market at least in some areas
Specifically what I have in mind is the Sage of Omaha’s injunction to “be fearful when others are greedy, and greedy when others are fearful”.
Is there a lot of greed in the market right now?
I think so. Now, that may not be evenly spread. In fact, some pockets of the UK stock market continue to look cheap to me, with unloved shares selling for what I see as bargain prices.
But other bits of the market are seeing the sort of greed I associate with the dotcom era. AI is an obvious example. However, this is not just about AI.
I think tech in general continues to offer many greedy-looking valuations and other sectors are starting to show a similar trend – defence being one.
During the first quarter with a new chief executive, Berkshire continued to be a net seller of shares, as it had been under Warren Buffett for the preceding several years.
Its cash pile is now $380bn – but apparently it does not see attractive enough opportunities to deploy cash faster than it is coming in.
So, perhaps now is the moment when investors taking a leaf from Buffett’s book ought to be “fearful”?
Turning theory into actionable practice
What does that mean?
One potential reaction can be to review a portfolio to see what valuations look unjustifiably high from a long-term perspective, then to consider whether to keep those shares or take profit by selling them.
Another is to do what I think smart investors do in any market – think carefully including from a financial perspective before buying more shares.
Take Nvidia (NASDAQ: NVDA) as an example.
I have long liked the chip giant. While it has certainly benefitted from surging demand on the back of AI, this is not some one-hit wonder. It has been innovating in the chip space for decades.
Before AI exploded it had already built a large customer base by offering specialist chips for a variety of purposes such as gaming.
AI has been a force multiplier for Nvidia, though. Its revenues and earnings have soared.
At 33 times earnings, the valuation does not seem ridiculous.
A voice in my head points to the recent earnings growth and potential for that to continue, as sales surge. First-quarter revenue was up 85% year on year while net income more than tripled.
But wait – am I being greedy?
After all, maybe the initial AI buildout is a costly one-off for many companies. There is a risk revenue and earnings could fall back sharply.
Or am I being fearful?
Some fearfulness can be helpful in greedy markets. At the current price, I will not be buying Nvidia stock.
Should you invest £5,000 in Nvidia right now?
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Christopher Ruane does not hold any positions in the companies mentioned.
